Canadian businesses shouldn’t be at a disadvantage when competing with foreign firms for business in Canada

Later this month, Canada’s premiers will meet in Charlottetown where their predecessors gathered 150 years earlier to lay the groundwork for confederation. The agenda for this year’s meeting of the Council of the Federation (COF) is not quite as ambitious. Yet as the country moves toward its sesquicentennial anniversary, one important element of nation-building remains incomplete.

When political and business leaders call for a “Canada Free Trade zone,” as some have done in recent months, it is a sure sign that the economic union of Canada’s provinces and territories is not as strong as had been envisioned at the founding of confederation.

Improving the competitiveness of the Canadian economy and expanding access to new business opportunities are shared overarching priorities for both business and government. For that reason, we, as national associations representing businesses and professionals, support the call for Canada’s leaders to dismantle internal trade barriers and ensure the free movement of goods, services, capital and labour between all parts of the country.

New international trade agreements, such as those with the European Union and South Korea, are much more ambitious and comprehensive in scope than the 20-year-old Agreement on Internal Trade (AIT), which governs Canada’s internal market. Canadian businesses face the prospect of being at a disadvantage when competing with foreign firms for business in other parts of the country. And for growth-oriented Canadian firms, internal trade barriers impose added costs that hurt their productivity and competitiveness.

Now is the time to modernize and strengthen Canada’s economic union with a 21st century internal trade agreement. In a discussion paper that we sent to the premiers and prime minister, we outlined five principles for achieving such an agreement.

First, the agreement should be as ambitious and comprehensive as any trade agreement that Canada has with a foreign country. Ideally this means that all sectors of the economy are covered by the agreement unless specifically excluded.

Second, the principle of mutual recognition should be at the heart of Canada’s internal market. Essentially this means that any good or service that can be legally sold in one province or territory can be sold in any other even if regulatory standards and requirements differ. Exceptions must be supported by evidence-based rationale that justifies the need to protect consumers.

Third, building on the principle of mutual recognition, provinces and territories should work together toward developing common standards and regulations. Canada is already working with the United States to address regulatory differences and the proposed Comprehensive Economic and Trade Agreement (CETA) with the European Union is expected to include a formal mechanism for the two jurisdictions to work cooperatively on the development of regulations.

Providing for effective and efficient dispute resolution is the fourth principle. Any effective trade agreement requires a process for parties to be able to challenge measures that are thought to be restrictive or unjust, to have those challenges adjudicated in a fair manner, and for the decisions to be enforced. One of the AIT’s main weaknesses is that it is difficult to enforce in a cost-efficient and timely manner.

Finally, any new internal trade regime must have an effective, transparent and inclusive governance structure. The AIT operates on a consensus-based decision making model, where one party can significantly hinder the decision making and reform process. It also lacks transparency and does not have any formal mechanism for stakeholder input. These weaknesses must be addressed and the agreement must be supported by a well-resourced secretariat if the agreement is to be adaptable enough to meet future needs.

The premiers showed through their support of the Canada-EU free trade negotiations that they are capable of achieving this level of ambition. We call on them to do so again by giving their respective trade ministers the mandate, direction and support required to negotiate a new internal trade agreement, one that will complete the vision expressed in Charlottetown 150 years ago.

Perrin Beatty is president and CEO, the Canadian Chamber of Commerce; Dan Kelly is president and CEO, the Canadian Federation of Independent Business; Don Jarvis is president and CEO, Dairy Processors Association of Canada; Jayson Myers is president and CEO, Canadian Manufacturers and Exporters and Garth Whyte is president and CEO, Restaurants Canada.

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